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28 Jun

June 2022: Illinois Governor Signs Bills Expanding Contractors’ Liability for Unpaid Wages of Subcontractors’ Workers

Posted at

10:09pm

in

Update Applicable to:
All employers with contractors in the state of Illinois.

What happened?
On June 10, 2022, Illinois Governor Pritzker signed House Bill 5412 (HB 5412) and its trailer bill, House Bill 4600 (HB 4600), into law, which will amend the Illinois Wage Payment and Collection Act (WPCA) to make certain primary contractors liable for any debt owed by a subcontractor at any tier relating to the wage claimant’s performance of labor for contracts entered into on or after July 1, 2022.

What are the details?
Under HB 5412, a primary contractor performing “erection, construction, alteration, or repair of a building, structure, or other private work in ” will be liable for the wages and fringe benefits of its subcontractor’s employees if the subcontractor fails to pay those employees. This reallocation of liability puts prime contractors on the hook for wage theft committed by their subcontractors.

HB 4600, the trailer bill, carves out two categories of contractors exempt from liability for such unpaid wages and benefits:

  1. Contractors who are signatories of collective bargaining agreements on projects where work is being performed; and
  2. Primary contractors altering or repairing an existing single-family dwelling or single residential unit.

Additionally, HB 4600 also limits the scope of the amendment to the WPCA, applying it only to contractors doing work in Illinois that exceeds $20,000 on private (i.e., non-government) projects, other than an owner acting as a primary contractor on the owner’s primary residence.

General contractors may not contract around this new obligation in their subcontracts.

Under the enactments, an employee must provide written notice to the primary contractor and the employee’s employer detailing the nature and basis for the alleged non-payment claim. If the employer or primary contractor fails to resolve the claim within 10 days after receipt of the notice or by any agreed-upon extension of that deadline, the employee-claimant may file a lawsuit to enforce the provisions of the act.

These bills went into effect immediately upon signage from Governor Pritzker.

For more information, please see the links below:

House Bill 5412 (HB 5412)

House Bill 4600 (HB 4600)

Illinois Wage Payment and Collection Act (WPCA)

Article 1Article 2

What do employers need to do?
Employers should review the links provided above and make their primary and subcontractors aware of this these new laws.

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